India Unemployment Seen at 7% in 2026; Inflation May Rise to 4.5%: Moody’s

India’s Inflation Rate is projected to increase to 4.5% in 2026 from 2.2% in 2025, according to Moody’s Analytics. The rate is expected to ease to 4.1% by 2028, but remain above the levels seen last year. 

Recent data shows a steady build-up. Retail inflation rose from about 0.25% in October 2025 to 2.75% in January 2026, and further to 3.4% in March 2026. 

Unemployment to Remain Elevated 

The Unemployment Rate is estimated to edge up to 7.0% in 2026 from 6.9% in 2025. It is projected to stay at 7.0% through 2027 and 2028. 

Among Asia-Pacific economies, India is expected to record the highest unemployment level. China and New Zealand are projected at 5.4% in 2026, while the Philippines is seen at 4.7%. 

Commodity Prices Adding Pressure 

Higher global commodity prices are identified as a key factor behind rising inflation. Tensions in the Middle East have pushed up energy costs, which are feeding into transport and production expenses. 

These cost increases have begun to reflect across sectors. Fuel and logistics costs have risen, contributing to higher price levels in the domestic economy. 

Supply Risks Linked to Food Prices 

The report highlights risks from potential shortages in chemicals and fertilisers if geopolitical tensions persist. Such disruptions could affect agricultural output and lead to higher food prices. 

Food carries a significant weight in consumer price indices across the region. Any sustained increase in food prices could have a broader impact on inflation. 

Regional Growth Outlook Softens 

Economic growth across the Asia-Pacific region is projected to slow to 3.8% in 2026 from 4.3% in 2025, and further to 3.6% in 2027. 

Exports had supported growth in the past year, partly due to demand linked to electronics and artificial intelligence. This support is expected to moderate amid tariff uncertainty and global volatility. 

Read More: NIQ Flags E-Commerce as Major Contributor to FMCG Growth in India! 

Conclusion 

The projections indicate rising inflation alongside a steady unemployment rate, with external cost pressures and slower regional growth shaping the near-term outlook. 

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